Orlen Trading Switzerland Investigated for Possible Sanctions Breach

By Julianne Geiger - Apr 11, 2024

Polish special services are currently investigating whether Orlen Trading Switzerland, a subsidiary of Polish refiner Orlen (PKN.WA), may have violated sanctions regarding the import of oil from Russia or Iran, broadcaster Radio Zet reported on Thursday.

This investigation represents just the latest inquiry directed at the state-controlled company, following allegations of artificially lowering prices ahead of the 2023 election and selling assets below fair value for the purposes of acquiring a smaller peer.

Orlen has denied breaching any sanctions. The ongoing scrutiny comes amidst allegations that the previous nationalist Law and Justice (PiS) administration had exerted political influence over state-controlled entities.

The report from Radio Zet surfaced shortly after Orlen announced on Wednesday a substantial write-down of 1.6 billion zloty ($403.82 million) on the value of Orlen Trading Switzerland (OTS), consequently impacting the group's 2023 profit.

In August 2023, Orlen's utilization of tankers that previously carried Russian crude to Asia for importing oil from the Middle East raised concerns about adherence to EU and G7 price caps for Russian crude. "All our activities, including those related to the delivery of crude oil, are in line with the applicable sanctions," Orlen said at the time.

Despite Orlen's then denial of involvement in Russian oil shipments, the company's strategies shifted amidst geopolitical sanctions to focus on purchases from Middle Eastern and U.S. crude, as well as Asian fuels.

Orlen was previously one of the biggest buyers of Russian crude oil for use in its refineries in Poland and Lithuania.

Last summer, PKN Orlen's Chief Executive Daniel Obajtek likened the act of losing Russian oil to forfeiting $27 million per day because of the price difference between Russian oil and these alternative supplies. Obajtek clarified that PKN Orlen was still purchasing Russian oil through the Druzhba network for its Czech refinery in Litvinov, which was not covered by sanctions.

By Julianne Geiger for Oilprice.com